When the clock strikes midnight tomorrow and 2012 is really here, nothing will have changed in your stock portfolio until you make the changes you have been putting off in hopes of recovering some losses. Are you one of those looking for stocks that have strong profitability coupled with the support of company insiders?
Profitability margins, gross margin, are beneficial to measure how much profits a company is making from its revenues. What good is making $1 billion if it costs you $999 million to make it? Gross margin is the profit after subtracting CGS, “cost of goods sold,” which includes inventory. Hence companies with higher gross margins are more profitable and have a better grasp and control of their costs.
For those companies that sell physical inventory, gross margin is a tremendously important measure since cost of goods sold is normally the largest expense on the income statement.
Ideas of Good Stocks To Buy For 2012
After screening for stocks with high profitability by searching for companies that are experiencing consistent increases in gross margin over the last four years, we narrowed down to a few good stocks with signs indicating that the stocks are keeping a greater portion of revenue as profits.
We then screened these stocks for the ones that have had significant net insider buying over the last six months indicating that company insiders believe in the company’s outlook.
The Following are the Top 5 Stocks with High Profitability Margins matched with High Insider Buying:
Solar Capital Ltd. (NASDAQ: SLRC) is trading today at $22.1101. SLRC is trading -1.49% below its 50 day moving average and -1.82% below its 200 day moving average. SLRC is -14.73% below its 52-week high and 16.98% above its 52-week low. SLRC‘s PE ratio is 15.32 and its market cap is $808.21M .
SLRC gross profit margins increased 81.86% to 84.74% (12 months ending December 31, 2009 vs. 12 months ending December 31, 2008) and also increased from 84.74% to 85.32% (12 months ending December 31, 2010 vs. 12 months ending December 31, 2009).
Over the last six months, SLRC insiders have been net buyers of 115,000 shares, which represents about 0.41% of the company’s 27.91M share float.
Solar Capital Ltd. is a business development company specializing in investments in leveraged companies, including middle market companies. The firm invests in aerospace and defense; automotive; beverage, food and tobacco; broadcasting and entertainment; business services; cable television; cargo transport; chemicals, plastics and rubber; consumer finance; consumer services; containers, packaging and glass; direct marketing; distribution; diversified/conglomerate manufacturing; diversified/conglomerate services; education; electronics; energy, utilities; equipment rental; farming and agriculture; finance; healthcare, education and childcare; home and office furnishing, consumer products; hotels, motels, inns and gaming; industrial; infrastructure; insurance; leisure, motion pictures and entertainment; logistics; machinery; media; mining, steel and non-precious metals; oil and gas; personal, food and miscellaneous services; printing, publishing and broadcasting; real estate; retail stores; specialty finance; technology; telecommunications; and utilities. It invests in the form of senior secured loans, mezzanine loans, and equity securities.
Genomic Health, Inc. (NASDAQ: GHDX) closing price in the stock market today was $25.62. GHDX is trading -4.22% below its 50 day moving average and -2.82% below its 200 day moving average. GHDX is -12.68% below its 52-week high and 34.84% above its 52-week low. GHDX‘s PE ratio is 116.45 and its market cap is $756.87M .
GHDX gross profit margins increased 75.41% to 78.23% (12 months ending December 31, 2009 vs. 12 months ending December 31, 2008) and also increased from 78.23% to 80.56% (12 months ending December 31, 2010 vs. 12 months ending December 31, 2009).
Over the last six months, GHDX insiders have been net buyers of 554,745 shares, which represents about 2.06% of the company’s 26.92M share float.
Genomic Health, Inc., a molecular diagnostics company, focuses on the development and global commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. The company offers Oncotype DX breast cancer test, which is used for early stage breast cancer patients to predict the likelihood of breast cancer recurrence and the likelihood of chemotherapy benefit. It also provides Oncotype DX colon cancer test, which is used to predict the likelihood of colon cancer recurrence in patients with stage II disease.
USA Mobility, Inc. (NASDAQ: USMO) closing price in the stock market today was $14.25. USMO is trading 2.19% above its 50 day moving average and -2.89% below its 200 day moving average. USMO is -24.72% below its 52-week high and 15.95% above its 52-week low. USMO‘s PE ratio is 2.90 and its market cap is $315.04M .
USMO gross profit margins increased 64.28% to 66.90% (12 months ending December 31, 2009 vs. 12 months ending December 31, 2008) and also increased from 66.90% to 67.08% (12 months ending December 31, 2010 vs. 12 months ending December 31, 2009).
Over the last six months, USMO insiders have been net buyers of 6,743 shares, which represents about 0.04% of the company’s 18.59M share float.
USA Mobility, Inc. provides wireless communications solutions to the healthcare, government, enterprise, and emergency response sectors in the United States. The company provides one-way and two-way messaging services. One-way messaging consists of numeric and alphanumeric messaging services. The numeric messaging services enable subscribers to receive messages that are composed entirely of numbers, such as a phone number. The alphanumeric messages may include numbers and letters which enable subscribers to receive text messages. Its two-way messaging services enable subscribers to send and receive messages to and from other wireless messaging devices, including pagers, personal digital assistants and personal computers.
ITT Educational Services, Inc. (NYSE: ESI) closing price in the stock market today was $58.29. ESI is trading 5.52% above its 50 day moving average and -14.94% below its 200 day moving average. ESI is -38.98% below its 52-week high and 16.07% above its 52-week low. ESI‘s PE ratio is 5.09 and its market cap is $1.55B .
ESI gross profit margins increased 62.20% to 65.90% (12 months ending December 31, 2009 vs. 12 months ending December 31, 2008) and also increased from 65.90% to 66.31% (12 months ending December 31, 2010 vs. 12 months ending December 31, 2009).
Over the last six months, ESI insiders have been net buyers of 374,000 shares, which represents about 2.08% of the company’s 17.96M share float.
ITT Educational Services, Inc. provides postsecondary degree programs in the United States. The company offers master, bachelor, associate, and career-oriented education programs in various fields, such as information technology, electronics technology, drafting and design, business, criminal justice, and health sciences. Its information technology programs include network administration, technical support, network technology, and systems technology; and electronics technology programs comprise electronics product design and fabrication, communications, computer technology, industrial electronics, instrumentation, and telecommunications.
Lincoln Educational Services Corp. (NASDAQ: LINC) closing price in the stock market today was $8.005. LINC is trading 5.20% above its 50 day moving average and -26.69% below its 200 day moving average. LINC is -59.75% below its 52-week high and 22.21% above its 52-week low. LINC‘s PE ratio is 5.16 and its market cap is $181.11M .
LINC gross profit margins increased 59.27% to 61.76% (12 months ending December 31, 2009 vs. 12 months ending December 31, 2008) and also increased from 61.76% to 62.51% (12 months ending December 31, 2010 vs. 12 months ending December 31, 2009).
Over the last six months, LINC insiders have been net buyers of 291,384 shares, which represents about 1.38% of the company’s 21.18M share float.
Lincoln Educational Services Corp. provides career-oriented post-secondary education services in the United States. It offers degree and diploma programs for recent high school graduates and working adults in the areas of health sciences, automotive technology, skilled trades, hospitality services, and business and information technology.
These 5 stocks, together with the Gold and Solar stocks we have profiled recently will be good places to start researching for the best stocks to buy for 2012.
Happy New Year to All!!
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